Next Steps in VenezuelaBy Alvaro Vargas Llosa | Posted: Wed. August 25, 2004Also published in San Francisco Chronicle

I witnessed the recall referendum firsthand in Venezuela on Aug. 15, and I would suggest that, despite its taking place under very intimidating circumstances and a high degree of government control, it cannot be denied that President Hugo Chávez had enough real popular support to withstand the effort to oust him at the polls. Major soul-searching is now required among Chávezs foes if they want their efforts to bear fruit in the future.

Let there be no doubt about the nature of that regime. Had it not been for the efforts of more than 3 million Venezuelans who have, through civil resistance, made life difficult for Chávez, Venezuela, the worlds fifth largest oil producer and the U.S.s third largest supplier, would be on its way to becoming a semi-totalitarian state. After coming to power in 1999, Chávez threw away the constitution and used referendums and ad-hoc elections to replace the standing institutions with a loyal National Assembly, a government-controlled Supreme Court and a subservient electoral tribunal. With the use of thugsthe infamous Bolivarian Circles modeled on the Cuban Committees of the Revolutionhe has intimidated opponents. Two violent incidents with many fatalities have produced no indictments, and there are political prisoners, such as Henrique Capriles, the mayor of Baruta Municipality accused of organizing a demonstration against the Cuban embassy (I tried unsuccessfully to visit him at the headquarters of the DISIP, the feared state-security apparatus).

Still, as Chávez proved, he has a considerable social base. Various factors come into play here. By far the most important is the hatred of all things related to the old regime, known as el puntofijismo, the name given to the agreements signed by the major parties in 1958 that inaugurated four decades of corrupt democracy in Venezuela. A coterie of private interests tied to the state and, particularly, to the oil industry (nationalized in the 1970s), enjoyed the spoils of a system that deprived the masses of access to capital. The military, bribed with oil money, stayed out of politics, and the people received what little the unproductive system of redistribution could channel to them.

One figure says it all: In the last quarter-century of that era, Venezuela accumulated some $300 billion in oil revenue (based on official government data), more than two thirds of Latin Americas foreign debt in the early1990s. Little of that was used to develop the country, and the people became convinced the rich, white upper classes had stolen their wealth. Chávez, a man of Native American and African descent, was a child of that deeply felt resentment. Rather than dismantle the apparatus that had impoverished the people, he took it to the extreme. That is why he became unpopular after his first two years in office. But since then, the polarization of Venezuelan society has allowed Chávez to position himself again as the champion of the poor against the remnants of the old regime.

He has also been ableand this is the second factor in his victory Aug. 15to unleash a torrent of oil money on the slums of Venezuela through a network of social services he calls missions that provide everything from food to educational scholarships. The effort is based on handouts, not on job-creating investments. In fact, the economy is in shambles, having registered a 10 percent drop in GDP in 2003, according to the International Monetary Fund. Thousands of small-sized businesses have closed down. But as long as the oil prices permit Chávez to obtain $20 billion a year, he can fund his populism.

The last factor in his victory lies with the opposition itself. Acción Democrática and Copei, the two parties that embody the puntofijismo era, are dominant, together with other relics such as MAS, despite the presence of new, promising groups, such as Primero Justicia. The opposition made huge mistakes, such as the attempted coup in 2002 and the oil strike in early 2003, that made Chávez the victim and blurred the fact that during his government alone, 5 million people have joined the ranks of the poor. The strike also gave Chávez the pretext to purge the state oil company of all vestiges of independent management. He then turned it into a source of funding for many radical groups in Latin America, from the piqueteros in Argentina to the MAS in Bolivia.

With the price of oil more than $40 a barrel, Chávez can count on the United Stateseager to avoid, in the middle of a presidential election, further price hikesto accommodate him. After all, he has never stopped shipping oil to the United States (1.5 million barrels a day, according to U.S. Department of Energy) or paying his debts, knowing that his power base depends on oil money.

This may turn out to be a good thing. It may finally dawn on the opposition that struggle is essentially domestic, and that radical new thinking, as well as new faces, are needed, and that Chávez needs to be attacked for perpetuating, rather than overturning, the old regime. If the opposition learns to live with this defeat, allows the new generation to come to the front and exposes the similarities between Chávezs system of oil-related patronage and that of the old regime, it will have a good chance of winning the presidential elections a couple of years from now.

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